HCT 8% Hits Based ON Conocophillips Common Stock

HECTOR, Minn., May 10 /PRNewswire-FirstCall/ -- Hector Communications Corporation (AMEX:HCT) today reported operating results for its first quarter ended March 31, 2006. Revenues were $7,754,000 for the three months ended March 31, 2006, an increase of 1% from $7,649,000 in 2005. The revenue increase was mainly due to increased sales of high speed Internet services to customers. Operating income increased 3% to $1,869,000 compared to $1,813,000 in 2005. Income from the Company's investment in Midwest Wireless Holdings LLC was $1,566,000 in the 2006 period compared to $1,070,000 in 2005. Net income was $1,699,000 or $.41 per diluted share in 2006 compared to $1,386,000 or $.34 per diluted share in 2005. Curtis A. Sampson, Chairman and Chief Executive Officer, said, "Midwest Wireless Holdings LLC, which is expected to be sold in 2006, has been the driver for Hector's increases in net income and per share earnings in recent years. We expect our core wireline telephone business to face significant challenges in the future, including loss of access revenue due to the impact of the dramatic growth in wireless telephony, possible changes to the level of regulatory support for rural telecommunications and the emergence of Voice over Internet Protocol (VoIP). In 2005 we retained the investment-banking firm of Stifel Nicolaus to assist us in assessing available strategic options for maximizing value to shareholders. That process is continuing." Hector Communications Corporation is a telecommunications holding company that, through its subsidiaries, provides local telephone, video and high-speed Internet service in rural communities in Minnesota, Wisconsin and North Dakota. The Company serves 29,400 telephone access lines, 8,000 cable television subscribers and 11,300 Internet customers and has minority ownership interests in other telecommunications companies. From time to time in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders and the investing public, the Company may make statements regarding the Company's future financial performance. Such forward looking statements are subject to risks and uncertainties, including but not limited to, the effects of the Telecommunications Act, new technological developments which may reduce barriers for competitors entering the Company's local exchange or cable television markets, higher than expected expenses and other risks involving the telecommunications industry generally. All such forward-looking statements should be considered in light of such risks and uncertainties. Hector Communications Corporation and Subsidiaries Earnings Summary Three Months Ended March 31 2006 2005 Revenues $7,754,191 $7,648,997 Operating income 1,868,762 1,813,311 Other income (expense): Income (loss) from investments: Midwest Wireless Holdings, LLC 1,566,365 1,070,343 Other unconsolidated affiliates (49,898) (2,201) Interest and dividend income 228,684 184,781 Interest expense (726,289) (730,172) Net other income 1,018,862 522,751 Income from continuing operations before income taxes 2,887,624 2,336,062 Income tax expense 1,189,000 950,000 Net Income $1,698,624 $1,386,062 Basic net income per common share: $.42 $.37 Diluted net income per share $.41 $.34 Cash dividends per share $.10 $.05 Hector Communications Corporation and Subsidiaries Condensed Balance Sheet March 31 December 31 2006 2005 Cash and cash equivalents $26,961,080 $25,245,358 Other current assets 3,931,515 4,477,313 Property, plant and equipment, net 36,724,908 37,381,570 Excess of cost over net assets acquired 30,921,094 30,921,094 Investment in Midwest Wireless Holdings, LLC 18,825,636 18,067,471 Investments in other unconsolidated affiliates 3,238,214 3,307,593 Other investments 7,653,248 8,037,986 Other assets 300,020 315,906 Total Assets $128,555,715 $127,754,291 Notes payable and current portion of long-term debt $6,491,000 $6,527,400 Other current liabilities 4,355,796 4,214,147 Long-term debt, less current portion 48,146,191 49,456,138 Deferred taxes and credits 5,260,718 5,308,790 Deferred compensation 797,482 802,116 Stockholders' equity 63,504,528 61,445,700 Total Liabilities and Stockholders' Equity $128,555,715 $127,754,291 DATASOURCE: Hector Communications Corporation CONTACT: Curtis A. Sampson, Chairman and Chief Executive Officer, Steven H. Sjogren, President, or Paul N. Hanson, Vice President and Treasurer, all of Hector Communications Corporation, +1-320-848-6611

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